I have Lightroom 3 and generally have been converting to DNG upon import. I read up on DNG and it seemed to be a good idea. However, I have seen others complain about a few things where DNG is concerned and am hoping someone here can help clear things up.

One of the complaints about DNG was that some EXIF data is lost when converting to DNG. Is this true? I thought the RAW data was all contained within the DNG.

Someone also complained about having to backup a full DNG file when changes are made rather than backing up a smaller XMP file. Not really an issue for me. But the XMP file brings up a good point. If my changes are being saved right to the DNG, does this mean I can't undo those changes? In other words, what if I wanted to send some DNG files to a friend to see what he would do with them? All my changes would be embedded into the DNG? Would he be able to revert back to the original? Would he see my changes in history in his Lightroom?

I've been using dng since its inception and have never had any problem with lost EXIF data. If you're worried about losing anything from the proprietary RAW file you could always use the embed option in DNG converter which embeds the original Raw file within the .dng file. Then, if you have any issues down the line you can use DNG Converter to recover the original RAW file. The only drawback with this approach is that your .dng files will be much bigger.

When you make edits to a RAW file, regardless of whether they are stored in a 'sidecar' XMP file or within a dng file, they are saved as an edit list which is then applied by whatever RAW converter application you use to interpret the data within the RAW file and display it as an RGB image, the RAW data itself is never altered and the changes are only ever applied when you export an RGB file. So if you send a dng file that has been 'edited' in Lightroom to someone else when they open it, they will get the file with your 'edits' applied. They can change these, or reset them to the 'as shot' defaults.

I'm an Aperture user and haven't used lightroom for a while so I can't say whether your friend would see your edit history. It would depend on whether Lightroom's history is recorded in the application as you edit, or whether it reads from the DNG. I would have thought the latter, but an easy way to tell is to make some changes, close Lightroom, then reopen it and examine the dng. If you can see the edit history then Lightroom is getting that info from the file and so will anyone else you send it to.

One of the advantages of the dng format is that it keeps all these edits in one place, so you don't have to worry about keeping track of additional XMP files when you want to backup or send files to someone else with your RAW 'edits' intact. But, as I've said, they're no more 'permanent' than those held in an XMP file, they're just integrated into the dng file itself.